E9-18 (Algo) Using Present Value Concepts for Decision Making LO 9-7

You have just won the state lottery and have two choices for collecting your winnings. You can collect $109,000 today or receive $21,800 at the end of each year for the next seven years. A financial analyst has told you that you can earn 10% on your investments.

Required:

1. Calculate the present value of both the options (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your answers to nearest whole dollar.)

2. Which alternative should you select?

• Option 1

• Option 2